(Bloomberg) -- R1 RCM Inc. will be acquired by TowerBrook Capital Partners and Clayton, Dubilier & Rice for $8.9 billion in an all-cash deal.
TowerBrook currently owns a 36% stake in R1, a company that helps hospitals optimize their billing and other payment functions. Outstanding shares will be acquired for $14.30, an 11% premium to its closing share price Wednesday.
The deal to take R1 private is expected to close by year-end, the companies said in a statement. It has been evaluating strategic alternatives since March, shortly after New Mountain Capital disclosed interest in acquiring the firm.
R1 shares gained 8.9% at 9:46 a.m. in new York.
The proposed purchase price is a 29% premium from R1’s closing price before New Mountain’s interest became public, the companies said. The $8.9 billion enterprise value deal will be financed with a mix of committed debt and equity from the buyers.
The acquisition shows the rising importance of companies that help US hospitals gain a financial advantage in their dealings with insurers and government programs that pay for health care. The industry, known as revenue cycle management, is estimated to generate $155 billion annually, according to Grand View Research.
R1 has more than 3,700 hospital clients and manages more than $1 trillion in revenue for hospitals and other providers, according to a company filing.
(Updates with opening shares in fourth paragraph)
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